FCC faces lobbying from cable industry and lawmakers over whether to expand oversight

DIBYA SARKAR

Wednesday

Nov 28, 2007 at 6:59 AM

WASHINGTON - The country's top communications regulator scrambled to save face Tuesday as fellow members of the Federal Communications Commission scuttled his effort to expand government control over cable programming.

A recent FCC report promoted by Kevin Martin, the agency's chairman, found that cable TV reaches a wide enough U.S. audience to trigger a rule within a 1984 law that would give the government significant new powers to ensure program diversity.

But the cable industry disputes the data underlying the report and a majority of the agency's five-member commission have expressed similar doubts.

That left Martin attempting to broker a compromise with the other four commissioners on the same day the FCC was scheduled to vote on the report - a process that caused the FCC to delay the start of its meeting by more than eight hours.

Martin told reporters that commissioners were discussing the possibility of forcing cable operators such as Comcast Corp. and Time Warner Cable Inc. to provide subscriber data so it could be included in a revised version of the report for the commission to vote on. The initial report, which Martin released two weeks ago, seemed destined for the scrap heap.

The FCC meeting was initially scheduled for 9:30 a.m., though by 5:30 p.m. it wasn't clear whether the issue would remain on the agenda or if the meeting would occur.

The cable subscriber threshold in dispute is known as the 70/70 rule, whereby 70 percent of U.S. households have access to cable and 70 percent of those households subscribe.

To prove the threshold has been reached, the FCC is using data from publishing company Warren Communications, which Martin said could still be used as part of a wider report.

But the National Cable and Telecommunications Association said large cable operators - representing 80 percent of the industry - already provide the FCC with annual data on market penetration, which the industry argues is still well below the 70 percent threshold.

If granted further authority by a triggering of the 70/70 rule, Martin could push through other proposals disliked by the cable industry, including a so-called a la carte service model that would allow subscribers to pick and choose channels they want rather than accepting bundled packages from cable companies.

Rebecca Arbogast, an analyst with Stifel Nicolaus & Co. Inc., said Martin probably should have never put this on the agenda in the first place since the data were questioned even by his fellow Republican commissioners.

"He got bumped up against a wall today," she said.

Several analysts and the cable industry have also said that Martin favors the phone companies and broadcasters over cable.

An FCC spokesman declined to comment on the matter beyond what Martin said earlier.

The agency's two Republican commissioners, Deborah Taylor Tate and Robert McDowell, have questioned whether the report's subscriber data are accurate. Jonathan Adelstein, one of two Democratic commissioners, has also expressed reservations.

Republican House Leader John Boehner of Ohio said last week in a letter to Martin that the FCC shouldn't expand its regulatory authority when there's ample competition. Twenty-three Republicans on the House Energy and Commerce Committee last week also said the FCC shouldn't use the rule to impose new mandates on the cable industry.

Federal regulators also decided Tuesday to postpone voting on a proposal that, if approved, would have required broadcasters to lease excess channels to small businesses owned by women and minorities.

Martin, who said the commissioners needed more time discussing the issue, has championed the plan in past speeches to increase diversity in programming and media ownership. The excess channels would have been available following the nation's digital transition in early 2009.

But the cable industry is fearful the agency would force cable companies to carry those channels, which it strongly opposes.

Brian Dietz, a spokesman for the National Cable and Telecommunications Association, contends the proposal dealing with minority ownership of channels could actually have resulted in less media diversity by forcing other programming off the air.

Dietz said the FCC also has twice before rejected must-carry programming over the last several years.

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